Why Brokerages Have Upgraded Hindustan Zinc Despite Fall In Profits?

The Vedanta Group firm, Hindustan Zinc had reported a fall of 21% in net profit this year ending March 2024, On the contrary, several brokerages have been raising target prices on Hindustan Zinc, the Metal Company.

Hindustan Zinc’s Q4 Results

In its Q4 Results, Hindustan Zinc operated a revenue of Rs.7285 crores which slipped by nearly 12% on a Year-on-Year Basis. It was higher by 3% on Quarter-on-Quarter Basis. The consolidated net profit stands at Rs.2038  crore in Q4 which has slipped to 21% from Rs.2583 crore which was reported in last year’s same quarter. There was also a fall in other income which fell from Rs.354 crore Q4 Previous year to Rs.273 crore.

Brokerages raising target prices on Hindustan Zinc

Even after a fall in net profit as reported by the company, several brokerages have raised their previous targets for the metal company as the numbers reported were in line with the expectations. Brokerage firm Nuvama said they have upgraded their FY25 and FY26 estimates for Hindustan Zinc Limited by 21% and 20% respectively, driven by higher Zinc and silver prices and have raised the target to  Rs. 340 from Rs.257 earlier.

Motilal Oswal has said that Hindustan Zinc has reported in-line numbers as per their expectations and added that the firm is improving its production with tight cost, They have reiterated their rating to “Neutral” and have revised the target price of the to Rs. 370.

Brokerages have raised their targets but those targets are still below the market price of the stock which suggests the valuations of the stock are rich from here, so they have mentioned to prefer attractive entry valuations from here.

Stock Performance

The stock of Hindustan Zinc has been up by 27% in the past 1 year and has seen a rapid rise of 37% from the last 1 month, The stock has made a 52-week high of  Rs.437.80 on the 12th of April,2024. The stock currently trades at a P/E ratio of  21.72  and earnings per share stands at  18.38.

Conclusions: As brokerages have raised their previous targets on the stock. The market has reacted positively to it and the stock is up by more than 3% and currently trades at Rs.413 a piece as of 22nd April. However, some analysts also believe that the stock is currently trading at rich valuations and that investors should wait for attractive levels to enter.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.